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IPO - Update AU Small Finance Bank

Analysts positive on AU Small Finance Bank IPO, subscription 18% on first day

AU Small Finance Bank (AUSFB) was subscribed 18% at the end of day 1 of its three day open offer today. 

The IPO, to raise Rs1,912 crore saw 32% subscription for the portion reserved for retail investors, and 8% for the portion for non-institutional investors. Qualified institutional buyers (QIBs) did not bid on the first day.

Analysts have been largely optimistic on this IPO. Angel Broking noted that AUSFB's focus on secured loans towards Vehicle, MSME & SME contributes to a stable book. The loan book of AUSFB is largely concentrated towards such secured loans, and the average ticket size of the above segments is Rs 3.4 lacs, Rs 10.4 lacs and Rs 2.2 cr respectively. These are growing segments in the current economy.

ICICI Securities points out that there are some risks, including concentration risk as major operations of AUSFB are in western India, and the challenges of the company in transitioning from an NBFC to a small finance bank. Analysts of the Systematix Group were upbeat, noting low NPA levels and high return ratios, as well as its strength in the segments it operates in.